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Lake Tahoe Unified School District, CA -- Moody's assigns A1 to Lake Tahoe USD, CA's 2020 GO Refunding Bonds, Series A and A-1

Rating Action: Moody's assigns A1 to Lake Tahoe USD, CA's 2020 GO Refunding Bonds, Series A and A-1

Global Credit Research - 19 Aug 2020

New York, August 19, 2020 -- Moody's Investors Service has assigned A1 ratings to Lake Tahoe Unified School District, CA's 2020 General Obligation Refunding Bonds, Series A (Bank Qualified) and Series A-1 (Federally Taxable). The bonds will be issued in the approximate amounts of $2 million and $14.4 million, respectively. Moody's maintains A1 ratings on the district's $65 million in outstanding general obligation (GO) debt.

RATINGS RATIONALE

The A1 rating reflects the district's solidly sized and growing assessed valuation (AV). District housing prices are increasing, and near-term AV growth may accelerate as a result of the coronavirus pandemic as individuals purchase area housing for sheltering in place outside of dense San Francisco Bay Area cities. Per capita assessed valuation of this resort community is high, driven by favorable second home values, and median family income is in line with that of the US. The rating also incorporates the district's adequate general fund position, which will remain stable despite stagnant state aid levels. We expect that the district will continue its practice of outperforming budgeted expectations to produce stronger actual financial results compared to budget. Also factored into the rating assignment are the district's manageable debt and retirement costs.

RATING OUTLOOK

Outlooks are usually not assigned to issuers with this amount of debt outstanding.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS

- Significant and sustained improvement to cash and reserves

- Material improvement to resident income levels

- Sustained growth to assessed valuation

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS

- Operating deficits that would weaken reserves

- Prolonged deterioration of the district's tax base

LEGAL SECURITY

The bonds are secured by the levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the district. The portion of the levy restricted for debt service is collected, held and transferred directly to the paying agent by El Dorado County on behalf of the district. El Dorado County participates in a Teeter Plan, under which the district receives 100% of its ad valorem property tax levied on the secured roll for GO bonds irrespective of any delinquencies.

USE OF PROCEEDS

Proceeds of the Series A bonds will refund the 2045 maturity of the district's 2008 Election Series 2010 bonds, and the Series A-1 bonds will refund certain maturities of the 2008 Election Series 2012 GO bonds. Both refundings generate net present value savings with no extension of debt service.

PROFILE

The district, located in El Dorado County, encompasses approximately 250 square miles, and serves the residents of the City of South Lake Tahoe and portions of the unincorporated areas of the County and Lake Tahoe Basin. The district currently operates seven schools: four elementary schools, one middle school, one high school and a continuation school, with enrollment for fiscal 2021 projected to equal approximately 3,876 students.

METHODOLOGY

The principal methodology used in these ratings was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Helen Cregger Lead Analyst Regional PFG West Moody's Investors Service, Inc. One Front Street Suite 1900 San Francisco 94111 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 William Oh Additional Contact Regional PFG West JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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